ISLAMABAD: The Ministry of Finance (MoF) on Tuesday directed all the ministries, divisions, departments and autonomous bodies to surrender within 10 days all savings and unspent allocations not expected to be utilised during the current fiscal year.
In a communication to all, the MoF directed all principal accounting officers (PAOs) to finalise revised estimates for FY25 and firm up budget estimates for the upcoming year and “surrender anticipated savings” by April 30.
This is the first time that MoF is seeking the surrender of funds two months ahead of the close of the fiscal year on June 30 and may handicap routine operations of the public sector. In the past, the last date for surrender used to be May 31 when the ministries, departments and, corporations, etc., had clarity of their financing requirements for the last month of the fiscal year. Even then, the expenditures used to be updated even after the passage of the budget for the following year.
MoF said that advancing the deadline by a month had been ordered based on the directives of the parliament’s Public Accounts Committee (PAC) to improve fiscal prudence.
Finance ministry advances the deadline by two months; move may handicap public sector operations
The directives cover all funding allocations, including the civil government’s running, employee-related expenditures (ERE) and non-ERE, grants, subsidies, and development funds within the revised PSDP of Rs1.1 trillion.
It may be noted that the parliament had approved Rs1.4tr worth of federal public sector development programme (PSDP) following recommendations of the National Economic Council — the highest decision-making body of the federal and its federating units. The PSDP was subsequently reduced to Rs1.1tr on pressure from the International Monetary Fund (IMF).
“An amount of Rs1400 billion was initially approved as PSDP 2024-25…The size of PSDP was, subsequently, reduced to Rs1100 billion for FY25”, an earlier order issued by the MOF on April 9 said.
To avoid audit objections going forward, the MoF directed all ministries and institutions to revise their PSDP through surrender orders.
The PSDP is already reeling under challenging conditions as less than 40pc of the revised allocations could be utilised in the first three quarters of the fiscal year, i.e. by the end of March 2025. Official data released by the Planning Commission reported total utilisation in the first nine months at Rs399bn, although the Planning Division said it had authorised about Rs665bn.
Under the mechanism announced by the Ministry of Finance for the current fiscal year, the government should release 15pc of the budgeted allocation in the first quarter, followed by 20pc in the second quarter, 25pc in the third quarter and the remaining 40pc in the last quarter of the fiscal year. This meant the government should have released about 60pc of allocations in the first three quarters.
As such, the estimated release for PSDP by the end of March should be around 60pc of the annual allocation or no less than Rs660bn. The Planning Commission claims that it has actually authorised Rs665bn for the first three quarters, slightly higher than the disbursement mechanism, but relevant executing agencies were utilising funds as per project requirements.
The public accounts committee of the parliament had recently asked the MoF that the surrender of funds should be done earlier to the pleasure of the finance ministry.
Published in Dawn, April 23rd, 2025
